MAPLearning map for this lesson
We build it up in three steps. At the end of each step, a 'Quick check' lets you test your understanding before moving on.
Before you startIn Lesson 1, Why is September so disliked?, we said that seasonality is not a prophecy but a tilt in probabilities, and that it is read through four numbers: average, , and . This lesson applies those four numbers to half-years instead of single months. September, the weakest month, falls within May–Oct, while the strong months of November, December and April fall within Nov–Apr.
- 1 · One number$1.17M : $34K
You can recall how much $10,000 differed depending on which half-year you picked, and state the conditions behind that number (price index, zero interest on cash).
- 2 · Insight · 3 · Data36 of 37 countries
You know what compares with what, and can read the results of 76 S&P 500 periods and 29 KOSPI periods split by era.
- 4 · Reversal · 5 · PracticeIt was different, but the gap narrowed
You can confirm that the gap disappeared over the last 10 years, and compare fixed-date trading with -confirmed trading yourself.
Build knowledge9 concepts built so far · 4 added in this lesson
Seasonality = a tilt in probabilitiesAverage, median, win rate, sample sizeComparing against a baselineSince 1950 vs the last 20 yearsNot "sell" but "lower your expectations"Nov–Apr vs May–Oct half-year comparisonNEWHalloween effect (36 of 37 countries)NEWThe gap vanishing over the last 10 yearsNEWFixed-date vs MACD-confirmed switchingNEW
1 · One number$1.17M : $34K
$1.17M : $34KResult of investing $10,000 only in Nov–Apr vs only in May–Oct (USD)S&P 500, 76 periods, 1950–2025 · price index basis, excluding dividends and costs, zero interest on cash in the off half-year
Suppose you put $10,000 into the S&P 500 in 1950. If you held it only in Nov–Apr each year and rested in cash during May–Oct, it would have grown to about $1.17 million by the end of 2025. Conversely, if you held it only in May–Oct and rested during Nov–Apr, you would have had about $34,000. Same index, same 76 years; the only difference was which half of the year you chose.
These numbers come with conditions. They use a price index that excludes dividends, trading costs and taxes, and assume zero interest during the off half-year. Also keep in mind that multiplying the two results gives the buy-and-hold result (about 400x). Even holding only May–Oct, the money grew 3.4 times.
Quick checkFrom the sentence "$10,000 became $34,000 by investing only in May–Oct," can we say that May–Oct was a period when you lost money?
No. The money grew 3.4 times over 76 years, so May–Oct was positive too. It just grew much more slowly than Nov–Apr.
2 · InsightThe same in 36 of 37 countries
is the observation that, when you split the year into two half-years, Nov–Apr and May–Oct, returns in the first half-year were higher than in the second. It starts around October 31, so it is also called the "Halloween effect," and the Stock Trader's Almanac named Nov–Apr the "." The key point is that the benchmark is not '0' but the opposite half-year. If you miss this, the saying gets passed along as "always sell in May."
Easy analogy · A restaurant's busy and slow seasons
A seaside restaurant has its peak season in summer. That doesn't mean closing in winter is a good idea; customers still come in winter, and sales are just 'a bit lower.' May–Oct was the slow season, not a season when business doesn't work.
This gap is not just a US story. Bouman & Jacobsen (2002) reported that in 36 of 37 countries' stock indexes, Nov–Apr returns were higher than May–Oct, and that the same phenomenon has been observed in the UK since 1694. Zhang & Jacobsen (2021) analyzed 62,962 observations across more countries and a longer period and found that Nov–Apr returns were about 4 percentage points higher on average. It is too wide and too long-lived to call a pattern found by chance after digging through one or two markets.
However, the cause has not yet been established. Explanations such as reduced trading and attention during summer vacations, and inflows of year-end bonuses and pension money are mentioned as candidates, but all of them are hypotheses. So this is a pattern with strong evidence but an unclear cause, and it is better used as a filter for other signals than as a standalone trading signal.
What Sell in May saysThe average return in Nov–Apr was higher than in May–Oct · It does not mean that 'May–Oct lost money'
Quick checkThe fact that Sell in May has been observed across many countries over hundreds of years raises what, and still doesn't tell us what?
It lowers the odds that it's a coincidence, but it doesn't tell us why it happens. Since the cause isn't established, it's hard to know in advance when it will weaken. That's why we use it as a filter, not a standalone signal.
3 · Data76 pairs of half-years
Splitting the S&P 500 into 76 half-years from 1950 to 2025, Nov–Apr averaged +6.95% with a median of +6.18% and rose in 58 of 76 periods (win rate 76%). May–Oct averaged +2.08% with a median of +2.68% and rose in 50 periods (win rate 66%). The average and median point in the same direction, and the sample of 76 is ample. Still, even a 66% win rate for May–Oct is by no means low.
How $10,000 (in dollars) grew · Nov–Apr only vs May–Oct only vs buy and hold
Hold Nov–Apr onlyHold May–Oct onlyBuy and hold
Calculated directly from month-end values of Yahoo Finance ^GSPC and ^KS11 daily closes (price index, excluding dividends, costs and taxes, zero interest on cash in periods not held). The vertical axis is a log scale. Retrieved 2026-10-09.
Splitting the KOSPI the same way from 1997 to 2025, Nov–Apr averaged +12.54% (up in 20 of 29 periods, 69%) and May–Oct averaged −0.15% (up in 12, 41%). The May–Oct median was −3.89%, so in Korea this half-year really did tilt toward the negative side. One interpretation is that Korea-specific schedules, such as year-end large-shareholder capital gains tax selling and re-buying at the start of the year, overlap, but this is a hypothesis, and Lesson 6 covers it in detail. Also note that the sample is only 29 periods, and one or two big moves, such as the currency crisis and the financial crisis, shake the numbers.
When you split the periods, the US picture changes.
| S&P 500 period | Nov–Apr avg (win rate) | May–Oct avg (win rate) | Gap |
|---|
| 1950–1989 (40 periods) | +7.12% (75%) | +1.27% (60%) | +5.85%p |
| 1990–2005 (16 periods) | +7.77% (88%) | +1.92% (69%) | +5.85%p |
| 2006–2025 (20 periods) | +5.96% (70%) | +3.85% (75%) | +2.11%p |
| 2016–2025 (10 periods) | +6.78% (70%) | +6.93% (90%) | −0.15%p |
S&P 500 price index, simple average of half-year returns. The year refers to the year containing May–Oct. Calculated directly; retrieved 2026-10-09.
Quick checkThe KOSPI's gap (+12.7pp) is much larger than the S&P 500's (+4.87pp). Does that mean Korea has the more reliable pattern?
A big difference is not the same as a reliable one. The KOSPI sample is only 29 periods, so a single year like 1998 (Nov–Apr +95.6%) shakes the average a lot. Look at the median and the results by period together.
4 · ReversalOver the last 10 years, the gap disappeared
The reversal. Looking at only the 10 periods from 2016 to 2025, the S&P 500 averaged +6.78% in Nov–Apr and +6.93% in May–Oct, so May–Oct was actually slightly higher. In 2024 (May–Oct +13.30%, followed by Nov–Apr −2.39%) and 2025 (+22.83% vs +5.39%), May–Oct led by a wide margin two years in a row.
Looking only at the 76-year average, Sell in May looks solid, but when you split the periods, the gap shrank from +5.85 percentage points in 1950–1989 to +2.11 percentage points in 2006–2025, and disappeared over the last 10 years. A widely known pattern may have weakened as more people traded on it, or the small sample of the last 10 years may be a coincidence. We can't say for sure which it is now. Interestingly, the KOSPI still showed a gap in 2016–2025, with Nov–Apr at +12.90% and May–Oct at +3.29%, but with only 10 periods, it is hard to put much weight on it.
Each year's two half-years and the 10-year average gap
Nov–Apr (blue) − May–Oct return difference10-year average gap (moving average)
Each bar is one year. A long bar upward means Nov–Apr was better than May–Oct that year, and a long bar downward means May–Oct was better. Tap a bar to see it.
The year refers to the year containing May–Oct. Example: the 2024 bar = the difference between May–Oct 2024 and Nov 2024–Apr 2025. Calculated directly from the same data.
Common misconceptions
"Can selling in May help you avoid losses?" The S&P 500's May–Oct averaged +2.08% with a 66% win rate. More often, selling meant sidestepping gains rather than losses.
"It has been right for hundreds of years, so it will be right this year too?" Seasonality is not a forecast but a tilt in probabilities. There are stretches, like the last 10 years, when the tilt disappears.
"Korea's difference is bigger, so it's more certain?" A large difference is not the same as a reliable one. The KOSPI sample is 29 periods.
Quick checkThe gap changed from +5.85pp to −0.15pp. Which is right: "the 6-month cycle is over" or "it still holds"?
It's hard to claim either. Take the possibility that it has weakened seriously, but the last 10 periods are a small sample. Since the tilt has shrunk, it is safer to use it as a lighter-weight filter.
5 · One thing to practiceFixed date vs MACD confirmation
Today's practice has two parts. First, read "sell in May" as "expected returns were lower in May–Oct." Then compare, yourself, buying and selling purely by date against buying and selling after confirming the trend.
The Stock Trader's Almanac's 6-month strategy holds stocks in Nov–Apr and moves to bonds or cash in May–Oct, but the actual trading days are set not by the date but by a signal. That is, once October arrives you wait for a MACD buy signal, and once April arrives you wait for a sell signal. The exercise below simplifies this idea and reproduces it using S&P 500 daily closes. Across 76 periods, the MACD approach averaged +7.10% (win rate 72%), similar to fixed dates (+6.95%, 76%), and cumulatively $10,000 became about $1.31 million versus $1.17 million. Change the period and see for yourself that the order flips, and that both approaches trail buy and hold in many stretches.
Exercise · Fixed-date approach vs MACD-confirmation approach
Start1950
End2025
Fixed date (enter 11/1 · exit 4/30)-
MACD confirmation (buy signal after October · sell signal after April)-
A simple educational backtest. S&P 500 price index, excluding dividends, trading costs, taxes and cash interest; MACD is based on daily-close exponential moving averages (12 and 26 days) with a 9-day signal line. It differs from the actual Almanac strategy (Dow index, detailed rules).
| Situation | How to use the 6-month cycle |
|---|
| Late October to April, trend also favorable | Keep contributing and buying as planned. Treat seasonality as no more than one extra confirming signal. |
| Entering May–Oct, trend-weakening signal | Instead of selling everything, adjust your weight by slowing new purchases or raising your stop-loss level. |
| May–Oct but the trend is strong | Put trend ahead of seasonality. There were years, like 2024 and 2025, when May–Oct was better. |
| Accounts with heavy taxes and costs | Frequent all-in switching easily loses its edge to trading costs and taxes, so avoid it. |
This is an educational example and does not recommend any specific trade. Lesson 7 wraps this up into a three-line 'condition, action, invalidation' rule.
The figures in this lesson are on a price-index basis, so dividends are left out. Including dividends would raise returns in both half-years, and a switching strategy earns interest on the cash period but pays trading costs and taxes. Including costs and taxes reduces the switching strategy's edge.
Quick checkIf you choose the last 10 years (2016–2025), both the fixed-date and MACD approaches trail buy and hold by a wide margin. How should you use this result?
Use it as grounds for not treating the 6-month cycle as an all-in trading rule. In the last 10 years the May–Oct average was high too, so the strategy that sat out that stretch fell behind. Use it as a filter that adjusts your weight slightly, along with a condition that invalidates it when the trend points the other way.
One sentence to take from Lesson 2It was different, but the gap narrowed